The Protecting Members Interest First (PMIF) Bill is the second round of legislation that will reportedly prevent trustees from providing insurance on an opt-out basis to members who are under 25 years old and begin to hold a new product after 1 October 2019, and to members who hold products with balances below $6,000.
The Senate economics legislation committee has already recommended that the government delay the new law’s implementation by two months to 1 December, with various super funds having also called for a delay, citing the original 1 October date as impossible to meet.
According to a statement, the effect of the new legislation will be to create an estimated $450 million gap in annual claims that will no longer be paid to members, where currently, millions of Australians do have access to insurance despite their age or wealth.
AIA chief executive Damien Mu said the industry is already going through major changes due to the implementation of recent Protect Your Super reforms, with the full impact yet to be realised.
As the system currently stands, “the system is affordable and efficient because it provides cover to all”, he remarked.
“Of every dollar collected in group insurance premiums, 84 cents were paid back in claims to members. By comparison, insurance sold directly to consumers paid out only 41 cents on the dollar,” he continued.
AIA said it receives more claims in regional areas relative to metro areas in NSW, Victoria and Queensland, with the insurer also paying more group insurance claims in Queensland than in any other state.
For disability claims, there is also a noticeable skew toward higher claim numbers in regional Queensland, AIA noted.
The organisation cited data from the Australian Institute of Health and Welfare Report on Australia’s Health 2018 to show that people aged 16 to 24 have the highest prevalence of mental disorders.
Cameron Micallef is a journalist at Nest Egg, writing primarily about personal wealth and economic markets.
Prior to this, Cameron worked for Australian Associated Press. He graduated from the University of Wollongong with a double degree in communications and commerce.